Aside from the personal tax benefits for interest on tuition costs, home equity loans can offer significant tax benefits to small business if they are used for business purposes. Even though the loan may be borrowed in your personal name, if the whole amount is re-loaned by you to the business and the business uses those funds for business purposes, then the net interest paid on the home equity loans can be tax deductible. We recommend that you discuss this with your tax advisor to take account of individual circumstances.

Refinancing Home Equity Loans
There are many good reasons to refinance your debts and a home equity loan is one of the main vehicles for achieving a good outcome from this exercise. Typical uses for home equity loan refinances are to take additional debt and at the same time restructure all existing short term debts. The remaining periods on existing short term debts such as; car loans and credit cards and personal loans etc. can cumulatively require a high monthly amount to meet their agreed instalments, whereas when combined with a new debt, in the form of a Home equity loan, at a lower interest rate and over as longer term, can make a new lower combined monthly payment. So it can be cash flow positive and reduce your total monthly outgoings.

Home Loan Defaults
When a borrower gets into arrears on their home loan, they have missed a due payment and are technically deemed to be “In Default”. Whenever loan payments are in default, financiers charge penalty interest rates and also a loan default fee until the arrears are caught up. Additionally if the situation continues, collections and legal costs and other penalty fees will also be levied against you, making it quite expensive for you to remain continually in arrears. Of course, eventually, the lender will foreclose on the mortgage and then you will have a whole other problem.

The key point is that it is best to catch up your arrears or refinance your debts as soon as you can in such situations, to minimise overall costs alone. Not to mention your peace of mind and stopping creditors from harassing you.

Why would I want to Refinance Existing Debts
If you are interested in borrowing additional funds or just reducing the amount you already pay per month, you may be able to achieve both in certain circumstances. This occurs when you have small short term loans that are consolidated into one of the best fixed loans over a longer average term. Also many small short term loans that you would be paying out in this exercise, which are secured by a vehicle etc., or unsecured, tend to be at higher interest rates than home equity loan rates. This is because of the strength of position of the home equity loan lender who is a secured lender. (They have the right to sell up your house if you don't perform and usually ensure there is enough equity there to cover their debt in that instance).

Are you self employed?
Self employed people often find financing their business growth a struggle without additional debt. They also find that it is extremely difficult to document and explain their business plan to a lender, or to supply them with up-to-date financial statements that demonstrate what they know about the prospects of their business. In these circumstances refinancing a home equity loan, where the lender primarily relies on the security as their way out of the loan, can be an ideal option.

Low doc or No doc loans
Another form of finance for self employed people is what are called Low doc or No doc loans. These Non conforming Loan products are designed for approval based on the borrower have above average security quality (home equity) and allows the borrower then to simply certify that they have the resources to meet the interest charges for the facility. Low or No doc loans can also be ideal facilities for investors who’s needs for debt come and go, as they change projects, and get in and out of the share market for example. These facilities can also be designed as a come and go facility (line of Credit)  so they can be used to refinance or consolidate other debts.

Fixed home equity loans - Which is best?
A fixed home equity loan is for homeowners using the equity in their home, but structured so that the term of the loan is fixed and so also is the repayment schedule. With this type of loan, a homeowner will know what their commitment will be in the future. Read more...